Practice Strategy-Management

Strategy management
ITIL® 4 Practice Guide

AXELOS.com
1st
May
2020
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2 Strategy management AXELOS Copyright View Only –
Contents
1 About this document 3
2 General Information 4
3 Value streams and processes 18
4 Organizations and people 23
5 Information and technology 27
6 Partners and suppliers 29
7 Important reminder 30
8 Acknowledgments 31

AXELOS Copyright View Only – Strategy management 3
1 About this document

This document provides practical guidance for the strategy management practice. It is split into
five main sections, covering:
● general information about the practice
● the practice’s processes and activities and their roles in the service value chain
● the organizations and people involved in the practice
● the information and technology supporting the practice
● considerations for partners and suppliers for the practice.
1.1 ITIL® 4 QUALIFICATION SCHEME

Selected content from this document is examinable as a part of the following syllabus:
● ITIL Leader Digital and IT Strategy
Please refer to the syllabus documents for details.
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4 Strategy management AXELOS Copyright View Only
2 General Information
2.1 PURPOSE AND DESCRIPTION
Key message
The purpose of the strategy management practice is to formulate the goals of the organization and
adopt the courses of action and allocation of resources necessary for achieving those goals.
Strategy management establishes the organization’s direction, focuses effort, defines or clarifies
the organization’s priorities, and provides consistency or guidance in response to the environment.
The starting point for the strategy management practice is to understand the context of the
organization and define the desired outcomes. The strategy of the organization establishes criteria
and mechanisms to decide how to best prioritize resources, capabilities, and investment to
achieve those outcomes. This practice ensures that the strategy is defined, agreed, maintained,
and achieved.
The strategy management practice applies at various levels and across various time zones. Strategy
generation is not a one-off activity, and the strategy cannot be expressed in a single document
that is then never amended. Strategy is a purposeful journey with a stated direction and
objectives, not a destination. This means that strategy management activities are ongoing, rather
than a one-off or periodic activity. Strategic decisions, plans, and actions vary in their lifetime,
applicability, and priority in the constantly changing circumstances of today’s organizations.
External and internal factors constantly change, as should an organization’s strategies.
An important factor affecting an organizations’ strategic positioning and objectives is the

development of digital technology. The wider use of technology, emerging capabilities such as
artificial intelligence (AI) or the internet of things (IoT), technology-based disruption of the
markets and industries all affect an organizations’ direction and its approach to strategy
management. For example, strategic decisions can be enabled by advanced analytics, or methods
used for strategy development should be adjusted for the emerging business and social dynamics
enabled by the technology.
Other external factors (political, economic, social, legal, and environmental) also continually
affect organizations. Consequently, organizations must adjust its strategic objectives, plans, and
priorities, or sometimes its vision of the desired future state.
The strategy management practice ensures that:

● organization’s vision, objectives and direction are defined and continually validated or
redefined
● actions that are needed to realize the vision are identified, agreed, and communicated
● execution of the strategy is continually evaluated, challenged, and improved.
These three aspects of the practice can be described as long-term, medium-term, and short-term
strategy management. 1
The strategy management practice is typically the responsibility of the executive leaders of the
organization. However, it is important to engage a broad group of internal and external
stakeholders in the strategy development. The executive strategic team has the critical role of
organizing and making the final decisions. Yet, the more stakeholders that are involved in the
strategic planning, the more effective and relevant the strategy, and the greater the stakeholders’
engagement.
1
Kachaner, N., King, K., and Stewart, S. (2016) Four Best Practices for Strategic Planning. Boston
Consulting Group, [online] Available at: https://www.bcg.com/publications/2016/growth-four-
best-practices-strategic-planning.aspx [Accessed 15th April 2020].

The strategy management practice provides the necessary inputs for many practices, including:
● architecture management
● workforce and talent management
● risk management
● service financial management
● project management
● organizational change management
● portfolio management
● relationship management.
These practices ensure that the organization-wide approaches, methods, and plans are developed
and adopted by the organization. Strategic alignment is needed to ensure that these approaches
are appropriate to the organization. Strategic alignment can be achieved by involving experts in
the strategy management practice and establishing frequent communication and feedback
between the practices.
2.2 TERMS AND CONCEPTS
2.2.1 Business strategy/digital strategy/IT strategy 2

Business strategy is how an organization defines and achieves its purpose. Every organization has a
business strategy. Some organizations maintain a formal set of processes and documents. Other
organizations rely on the less formal communication, decision-making criteria, and patterns of
behaviour established the governing body and executives.
Regardless of the rigour of the strategy management practice, a business strategy will encompass:
● a way of defining, refining, and communicating the vision of the organization
● a way of defining the goals of the organization
● the organization’s business model and operating model (see 2.2.4)
● a means of aligning the different parts of the organization’s ecosystem to achieve its goals; for
example, its people, information and technology, value streams, processes, and
partners/suppliers
● guiding principles that determine how decisions are made and what actions are taken
● agreements of the actions that the organization will take and how to allocate resources to
ensure those actions, often in the form of strategic plans.
The level of formality of a business strategy is determined by the culture of the organization and
the demand for formality by the organization’s stakeholders and environment, for example
regulatory requirements.
In a technology-enabled organization, the role of technology in the organization’s strategy is key.

This raises the question of the positioning of the digital strategy and/or IT strategy towards the
business strategy. In order to maximize the effect of digital technology on the business,
organizations must embrace the greatest integration of digital technology into the business
strategy.
Definition: Digital strategy
A business strategy that is based on all or in part on using digital technology to achieve its goals
and purpose.
2
For more on the topic, see ITIL 4: Digital and IT Strategy, section 2.8

Digitalization of the business strategy helps to achieve the following objectives:

● exploit an opportunity in the market that has been created due to customers using a new digital
technology
● use digital technology to engage with customers and improve their experience with the products
and services
● relaunch existing products and services with new features and delivery methods made possible
by digital technology
● use digital technology to improve the performance or efficiency of the organization’s operations
● create new technology-enabled products and services.
The term IT Strategy is used in three ways:
● as a synonym for, or component of, digital strategy, in the sense that all digital technology
comprises IT. This term has been largely replaced by the term digital strategy
● as a technology strategy and corresponding architecture that supports the digital strategy
● as a strategy for the back office and administrative elements of information technology, for
example, the data centre, HR and financial systems, infrastructure, and networking.
Regardless of the terminology adopted by the organization, it is important to ensure that:

● technology is included in the organization’s strategy as a key enabling element
● technology-based innovations are considered an important business driver and potential
disruptor
● technology-related risks are addressed
● technology competence of the organization is seen as a priority
● all uses of IT are included in the strategy, including any IT used in business-facing and support
activities.
Figure 2.1 Business, digital, and IT strategy

2.2.2 Purpose, vision and strategic objectives

Many organizations differentiate between its vision and its purpose.
Definitions:
Purpose
The reason that an organization exists, or its core business.
Vision
The defined aspiration of what an organization would like to become in the future.
The purpose of an organization is constant, but its vision is likely to change with the purpose
remaining as it was. However, it is possible that at certain moments the vision will require a
repurposing of the organization. In this case, new purpose becomes a part of the organization’s
vision.
The organization’s strategy encompasses its purpose and vision, and outlines the specific
objectives and initiatives required to achieve these.
The strategic objectives of an organization are usually structured around the purpose and vision
statements. It is useful to add a resource perspective to the structure, by mapping the objectives
to the four dimensions of service management. For example, an organization’s vision of ‘doubling
the size of the business while reducing its environmental footprint’ can be encompassed by the
strategy structured around growth and sustainability, addressed by strategic initiatives related to
organization and people, information and technology, value streams and processes, and suppliers
and partners.
Start where you are. The exact structure of the organization’s strategy varies, depending on the
organization’s purpose, vision, and current state. It is important to understand the current state,
as a strategy rarely develops out of nothing. The organization has resources, architectures, value
chain and value streams, products and services, customers, and other stakeholders. All of these
are likely to be addressed by the strategy and impact the structure of the strategic objective and
initiatives. The current status of the organization provides strategic opportunities, but also
imposes constraints. Objectives that are too ambitious and unattainable might make the strategy
unrealistic, which will affect its effectiveness and the attitude towards it across the organization.
Rather than planning a huge leap towards the vision, progress iteratively with feedback. See
section 2.4.1 for more on this topic.
2.2.3 Strategy in a VUCA environment

The business environment is often characterized by high levels of volatility, uncertainty,
complexity, and ambiguity (VUCA). Organizations aim to address these in its strategies, embedding
capabilities such as agility, resilience, innovativeness, and complexity-thinking.
2.2.3.1 Organizational agility and resilience

For an organization to be successful, it must not only achieve organizational agility to support the
internal changes, but also organizational resilience, which will allow it to withstand and even
thrive within changing external circumstances. The organization must also be considered and
managed as a part of a larger ecosystem of organizations, all delivering, coordinating, and
consuming products and services.

Key message
Organizational agility is the ability of an organization to move and adapt quickly, flexibly, and
decisively to support internal changes. 3
Organizational resilience is the ability of an organization to anticipate, prepare for, respond to,
and adapt to both incremental changes and sudden disruptions from an external perspective.
External influences could be political, economic, social, technological, legal, or environmental

(PESTLE). Resilience cannot be achieved without a shared understanding of the organization’s
priorities and objectives, which sets the direction and promotes alignment, even as external
circumstances change. In extreme situations, resilience is provided by effective continuity. This is
a last resort when normal capability to adapt to changing circumstances is insufficient. Agility
supports resilience by enabling the internal changes required to adapt to external influence.
The organization’s purpose and vision provide direction to the level of agility and resilience that is
expected by the stakeholders. The strategy management practice transforms this direction into
strategic objectives, models, and initiatives to achieve the required level of organizational agility
and resilience.
2.2.3.2 Innovation
Digitally-enabled organizations often make innovativeness a key part of its strategy. Innovations
might arise in any of the four dimensions of service management. Whichever dimension an
innovation originates from, it is likely to affect all four dimensions. For example, the introduction
of GPS on personal devices led to significant changes in the operation and user experience of taxi
and delivery services.
Definition: Innovation
The adoption of a new technology or way of working that has led to the significant improvement of
an organization, product, or service.
The definition above highlights the fact that on its own, new technology or ways of working are not
innovations, and are not guaranteed to improve a situation. New technology or ways of working
are required for innovations to happen, however the fact that they are new is not enough. There
are many new technologies and approaches being created and offered outside and within
organizations, but these are only innovative if its adoption leads to improved value. The key
capabilities essential for an organization to benefit from innovations are:
● research and development to generate and identify innovation opportunities
● continual analysis of opportunities
● effective implementation of selected methods and devices.
These introduce requirements to multiple practices (business analysis, portfolio management,
project management, change enablement, organizational change management, workforce and
talent management, relationship management and other practices). It is likely that the
management of innovations will be supported by a dedicated value stream. All of these are ways
3
Many organizations confuse agility with Agile methods. Organizational agility does not imply
adoption of Agile, although may benefit from it in certain areas. For more on this, see England, R.
and Vu, C. The agile Manager, (2019)

to implement a strategic objective of becoming an innovative organization, but the first step
would be to recognize the need for innovativeness and to set it as a strategic objective.
Innovativeness, just like any strategic objective, cannot be managed by a small specialized team
working in isolation. If chosen as a strategic priority, it should be embedded in the organization’s
operation at every level. Identification of the innovation opportunities, supported by the continual
monitoring of the relevant sources and by internal research and development work, should be
encouraged across the organization. Initiatives should be processed promptly and transparently,
with effective feedback loops and should involve the initiative’s originators in its realization
wherever possible. The effect of the initiatives should be reviewed and reported, with a high
tolerance for failure, as not every idea or initiative will prove to be an innovation. Highly
innovative organizations should adopt the Probe-Sense-Respond heuristic for experimentation in a
complex environment (see figure 2.2).
2.2.3.3 Adapting for variable complexity

The complexity of the business environment and of internal organizational systems vary from
clear, predictable, and structured contexts to complicated, complex, and even chaotic. 4 Different
levels of complexity can be addressed with different heuristics and imply different constraints that
are imposed by the strategy, as shown in Figure 2.2.
Figure 2.2 The Cynefin framework 5
The approach to the strategy management practice and the resulting strategy might vary
significantly, to adjust to the complexity of the environment.
In an uncomplicated context, a strategy might offer a set of fixed constraints in a form of rules,
policies, and related enforcement. A strategy like this would be executed by following a set of
clear rules and likely to be effective if the context remains predictable and follows the same
patterns that served as assumptions for the strategy. This kind of strategy can be cascaded from
4
For more on complexity and sense-making visit: cognitive-edge.com, (2018). Cynefin® framework
introduction [online] Available at: http://cognitive-edge.com/videos/cynefin-framework-
introduction/ [Accessed 15th April 2020]. This is also addressed in ITIL Specialist High-velocity IT
and Digital and IT Strategy publications.
5
http://cognitive-edge.com/videos/cynefin-framework-introduction/ Reproduced with permission
of Cognitive Edge

the top of the organization down to the operational level, with a high degree of detail and be
enforced through procedures.
In a VUCA environment, this approach to the strategy management practice is ineffective and
might lead to the strategy being ignored or followed only as a formality, sometimes leading to
negative consequences for the organization and other stakeholders.
In order to be effective in a complicated or complex environment, the strategy should relax the
constraints it establishes and govern or enable, depending on the situation, the desired behaviour
and effective decision-making. Operating in a complicated or complex context is possible when
decisions are guided with a shared set of principles, and managers, teams, and practitioners are
empowered to make decisions and find solutions through analysis and experimentation. In
environments like this, the strategy management practice ensures that the guiding principles are
agreed, communicated, and interiorized across the organization.
Key message
Although the ITIL guiding principles provide a good starting point, organizations benefit from
developing and following their own set of principles based on the purpose, values, and vision of
the organization. They are more specific and therefore more useful in the organization’s context
than any generic principles adopted from an external source.
In a chaotic environment, no effective constraints are applicable, and even the agreed guiding
principles might not apply. In situations like this, decisions are likely to be made impromptu, and
tested practices are unlikely to provide the expected results. A strategy might help to prepare for
chaotic situations by defining who is in charge of decision-making, how success of the actions
should be assessed, and how to identify and exploit opportunities for coming back to a complex
and more manageable situation.
2.2.3.4 Sustainability
The concept of a sustainable organization evolved from the focus on environmental matters to a
wider understanding of sustainability. It is one of the key aspects of many organizations’ vision and
strategy and is increasingly important in the context of VUCA business environments.
Definition: sustainability
A business approach focused on creating long-term value for society and other stakeholders, by
addressing the risks and opportunities of economic, environmental, and social developments.
Organizations are moving from a focus on profitability to the triple bottom line, an approach that
covers financial, social, and environmental aspects, as shown in Figure 2.3 (Bordoloi et al., 2018).
The triple bottom line marks a shift from short-term financial goals to long-term sustainability
goals, which is an integrated business method. Sustainable goals not only improve an
organization’s brand and reputation, but drives stakeholder value for customers, employees, and
society in the form of better health, climate, and resource utilization. Read more on the triple
bottom line approach in ITIL 4: Drive Stakeholder Value, Section 3.4.

Figure 2.3 The Triple bottom line model
To enable sustainability as a strategic priority, organizations should embed respective principles,

objectives, ways of thinking, and working into all of the organization’s teams, value streams,
products, and services. The strategy management practice ensures that the sustainability
principles and objectives are clearly defined and communicated, to be embedded into the
organization’s approaches and practices, including architecture management, supplier
management, business analysis, service financial management, relationship management, service
design, portfolio management, and other practices. Considerations, challenges, and suggestions
from these practices are an important input to the strategy definition; strategy for sustainability,
just like for other aspects, should be developed by the organization, not a small group of executive
leaders.
2.2.4 Business models and operating models 6

A strategy is not limited to a collection of principles and objectives; it should also enable the
achievement of the objective by providing a business model and an operating model to the
organization.
A business model describes how all the pieces of an organization should be configured to provide
the intended value proposition to customers, based on the strategic choices and consequences
discussed in the strategy. The business model shows how all of the components work together to
provide value, rather than only focusing on how each product or service provides value
individually. Business models therefore reflect the system of choices and consequences of
strategy.
6
For more on business and operating models, see ITIL 4: Digital and IT Strategy, sections 2.11 and
2.12 and https://www.axelos.com/case-studies-and-white-papers/business-models-and-operating-
models-white-paper

Business models are frameworks that consist of three major themes:

● How an organization works to create a value proposition through its products and services. This
includes resources of the four dimensions, key activities, and cost structures associated with
value creation.
● How an organization makes its value proposition. This includes relationships with service
consumers, channels, customers segments, and revenue streams.
● How an organization fulfils the promises it has made and the expectations it has set.
The strength of the business model as a planning tool is that it is a concept and therefore a
flexible tool. It allows those who define strategy, to mix and match several competitive business
models and different organizational configurations, without getting tied into complex details. As a
planning tool, the business model assists strategists in analysing, testing, and validating ideas
against individual business elements, as well as how those ideas will perform across the entire
business model.
The flexibility of business models means that it can be easily copied by competitors. It is common
practice for organizations to compare competitors’ business models to determine how they can
best compete against them.
If business models are used to describe how an organization creates value, then operating models
are used to describe how the organization is run. Operating models represent a series of practices
and choices and how they interact to allow the organization to fulfil its defined value proposition
and hold its market position. Operating models ensure that each of these choices and practices,
such as which competencies to acquire and develop, what technology needs to be deployed, and
which suppliers to engage with, work together in a unified way.
An operating model, like a business model, is an abstract tool to facilitate the design and
configuration of how an organization is run, to enable the value outlined by the business model.
There are two key themes in an operating model:
● The key work that takes place. At the centre of an operating model is the organization’s value
chain, which illustrates the main work an organization needs to do in the form of value streams.
● The context in which the value streams will be performed, including:
● how suppliers or partners will be involved in the value streams and the creation of value
● where the work done in the value stream will be located and what resources and practices
are needed to perform the work, and how they interact
● how targets will be set and performance measured to ensure that value streams are
functioning optimally.
The strategy management practice ensures that the organization follows the agreed operating
models and that business and operating models are up-to-date, effective, continually reviewed,
and improved.
2.3 SCOPE
The strategy management practice includes:
● defining and communicating the organization’s purpose, vision, and objectives
● defining, communicating, and continually improving the business and operating models
● reviewing the organization’s performance and adjusting the way it works, where needed.
There are several activities and areas of responsibility that are not included in the strategy
management practice, although they are still closely related to it. These are listed in Table 2.1,
along with references to the practices in which they can be found. It is important to remember
that ITIL practices are merely collections of tools to use in the context of value streams; they
should be combined as necessary, depending on the situation.

Table 2.1 Activities related to the strategy management practice described in other practice
guides
Activity Practice guide
Implementing strategic decisions All practices
Managing strategic risks Risk management
Measuring and reporting strategy Measurement and reporting

performance
2.4 PRACTICE SUCCESS FACTORS
Definition: Practice success factor
A complex functional component of a practice that is required for the practice to fulfil its purpose.
A practice success factor (PSF) is more than a task or activity, as it includes components of all four
dimensions of service management. The nature of the activities and resources of PSFs within a
practice may differ, but together they ensure that the practice is effective.
The strategy management practice includes the following PSFs:
● ensuring that the organization's strategies are effective and sustainable, and meet the
stakeholders' evolving needs
● ensuring that the agreed strategies and models are communicated across the organization and
embedded into the organizations' practices and value streams.
2.4.1 Ensuring that the organization's strategies are effective and

sustainable, and meet stakeholders' evolving needs
Effective strategies correctly translate the organization’s purpose and the needs and requirements
of the stakeholders into the organization’s vision, objectives, business and operating models. They
ensure the fulfilment of the agreed objectives across the organization, considering internal and
external constraints and influences.
To create and execute an effective strategy, organizations 7 must:

● explore the strategy at distinct intervals (long-term, mid-term and short-term, as described in
section 2.1)
● constantly reinvent and stimulate the strategic dialogue
● engage the broad organization
● invest in execution and monitoring.
7
Kachaner, N., King, K., and Stewart, S. (2016) Four Best Practices for Strategic Planning. Boston
Consulting Group, [online] https://www.bcg.com/publications/2016/growth-four-best-practices-
strategic-planning.aspx [Accessed 15th April 2020].

Key message
‘With strategic planning — unlike sports or music — repetitive practice doesn’t make perfect.’
Four Best Practices for Strategic Planning by Nicolas Kachaner, Kermit King and Sam Stewart
The strategy management practice is not a one-off activity performed annually or every three to
five years. Instead, it is a continual activity involving reorientation, repositioning, and redirecting
the organization in changing circumstances. The organization’s strategy should promptly and
effectively react to emerging risks and opportunities, correct inefficiencies, and generally correct
the course of action. It is a practice of constant navigation, rather than the preliminary mapping of
a trajectory to follow. This does not devaluate planning, it just makes it dynamic and ongoing. The
process of strategy generation and continual development (see section 3.2.1) should be performed
on an ongoing basis. This does not mean the full business strategy has to be redefined every day.
Instead, its natural development and execution should be constantly monitored and corrected or
amended where relevant.
To enable this continual strategic navigation, it is critical to engage with the broader organization.
Strategic dialogue followed by strategic planning and execution should involve all key stakeholders
from within and outside of the organization: managers, employees, governing body, customers,
regulators, partners and suppliers, and so on.
An effective strategy management practice also depends on a good understanding of the position
of the organization and of its progress in fulfilling its strategic objectives. The measurement and
reporting practice suggests two main types of reports: operational 8 and analytical.
Operational reports are created to monitor performance, identify deviations, and initiate
corrective actions to support operations. If automated, operational reports can be produced
promptly and frequently, even daily or multiple times per day. This results in operational reports
sources of very recent data.
Analytical reports deal with data analysis, trends and its explanations and investigations.
Analytical reports are usually produced by skilled strategic analysts, sometimes involving external
expertise.
When defining targets and metrics for strategic objectives, organizations should be careful of its
influence on people’s behaviour and the unintended consequences for the organization. For
example, if a strategic objective of embracing open innovation is supported by a target of 50% of
innovations sourced from outside the company, it might lead to the artificial regulation of the
naturally emerging innovative initiative and cause harm to the organization, at the same time
demonstrating the expected achievement.
Data is at the core of the personal and organizational decision-making process and evolution. Yet,
data is not the only source of knowledge used in decision-making. In fact, the term data-driven
often implies that data equals or includes insight. If data is assembled from facts, statistics,
quantities, symbols, and so on, the exclusive use of a data-driven approach might limit an
organization’s potential to evolve and might prove to be unwise. 9
Insight is the ability to gain an accurate and deep understanding of a subject. It might be
interpreted as knowing and feeling the underlying nature of things. Insights are a result of human
intelligence, including emotions, experience, and feelings. Insights are a supplementary
component of the data and are a result of an individual’s experience and personality. Therefore,
8
Note that ‘operational’ here means ‘demonstrating how a managed object is operating’; it may
refer to managed object at operational, tactical, or strategic level. For more on types of reports,
see the Measurement and Reporting Practice Guide.
9
bts.com, (2015). Creating an Insight Driven Organization. [online] Available at:
https://www.bts.com/blog-article/business-insight/creating-an-insight-driven-organization
[Accessed 15th April 2020].

the greater the experience and expertise of an individual, the more useful their insights will be.
Insights cannot be produced by artificial intelligence.
Techniques such as ALOE 10 (asking, listening, observing, empathizing) and the development of
emotional, social, and system intelligence, support an organization’s performance and evolution.
They work much more effectively when adopted by the strategic decision makers and help to
create and maintain an insight-driven strategy. 11
2.4.2 Ensuring that the agreed strategies and models are communicated
across the organization and embedded into the organizations' practices
and value streams
A strategy is as effective as it is executed. Without the adoption and implementation of the
strategy across the organization’s practices, value streams, products and services, the strategy
management practice is just a planning exercise.
The key factors of successful execution of strategies are:

● effective communication
● continual improvement
● effective organizational change management
● embedding the vision and the principles in the organizational culture.
The principles of good communication described in ITIL 4 Direct, Plan and Improve publication help
to ensure that strategic communications are effective. Table 2.2 explains how the principles can
be adopted for this purpose.
Table 2.2 Communication principles for strategic communications
Communication Strategic communications

principles
Communication is a two- Strategic communications should not be limited to one-way awareness

way process communication or objective setting. Strategy should develop based on
the input from stakeholders, including feedback
We are all communicating Non-verbal and non-explicit communications matter, especially when
all the time it comes to communicating principles, values, and ways of thinking and
working. Leading by example and transparency are key enablers of
strategy adoption and fulfilment
Timing and frequency Changes in strategy should be communicated when they can be
matter adequately received and processed. Status of the ongoing initiatives,
climate in the organization, external events, and other factors should
be considered. Empathetic and thoughtful communication is more
effective
There is no single method Different stakeholders prefer different means of communication, from
of communicating that face-to-face meetings to using social networks and online publications.
works for everyone The method, channel, and format should be selected with careful
10
https://www.bts.com/blog-article/business-insight/creating-an-insight-driven-organization
[Accessed 21st April 2020]
11
For more on data-driven and insight-driven decisions, see ITIL Knowledge Management Practice
Guide, Sections 2.2.4 and 2.2.5.

consideration to the information’s sensitivity and information security

The message is in the risks, but wherever possible stakeholders’ preferences should be taken
medium into account
All practices should be designed for strategic alignment and continual improvement. This means
that they are planned and executed to support relevant strategic objectives, and they are
continually reviewed to ensure that this is achieved. It is important to follow this approach when
the practices are developed and applied in an organization. Too often, practice owners focus on
the execution of the practices’ processes and do not pay enough attention to strategic alignment
and continual improvement. The same recommendations apply to the organization’s value
streams, products, and services.
The adoption and execution of a new strategy often requires organizational changes. Effective
organizational change management practice ensures that these are run effectively and to the
stakeholders’ satisfaction. Refer to the OCM practice guide for recommendations.
Organizational change management and workforce and talent management practices help to
develop a healthy organizational culture and to establish an improvement loop between the
culture and the strategy. The two are naturally and mutually enabling; strategy is based on the
culture and supported by it as long as it fits the culture and does not contradict people’s beliefs,
values, and ways of thinking. At the same time, new values, principles, and ways of thinking and
working can be introduced by the strategy and embraced by the organization if they are
sufficiently aligned with the current culture and fit the absorptive capacity of the organization.
With that said, strategy, particularly in cases of digital transformation, may challenge some
people’s beliefs, values, and ways of thinking as it requires a dramatic shift of the entire
organization. It is the role of leaders to drive the organizational change, enable changes in
competencies and behaviours, and enable a shift to a new culture that supports a new digital
vision.
2.5 KEY METRICS

The effectiveness and performance of the ITIL practices should be assessed within the context of
the value streams to which each practice contributes. As with the performance of any tool, the
practice’s performance can only be assessed within the context of its application. However, tools
can differ greatly in design and quality, and these differences define a tool’s potential or
capability to be effective when used according to its purpose. Further guidance on metrics, key
performance indicators (KPIs), and other techniques that can help with this can be found in the
measurement and reporting practice guide.
Key metrics for the strategy management practice are mapped to its PSFs. They can be used as
KPIs in the context of value streams to assess the contribution of the practice to the effectiveness
and efficiency of those value streams. Some examples of key metrics are given in Table 2.3.

Table 2.3 Example of key metrics for the practice success factors
Practice success factors Key metrics
Ensuring that the organization's Stakeholder’s satisfaction

strategies are effective and
sustainable, and meet the Number and diversity of stakeholders involved in the strategy
stakeholders' evolving needs planning
Number and percentage of strategic objectives achieved
Number and percentage of strategic initiatives successfully

fulfilled
Number and impact of cases where strategy was found to be

outdated or irrelevant
Number and impact of stressful internal and external events that

were successfully addressed by the strategy
Ensuring that the agreed Awareness of the strategic principles, objectives and initiatives
strategies and models are across the organization
communicated across the
organization and embedded into Strategic alignment of the organization’s practices, value
the organizations' practices and
streams, products and services
value streams
Number and impact of cases where strategic objectives were not

supported by practices, value streams, products or services
The correct aggregation of metrics into complex indicators will make it easier to use the data for
the ongoing management of value streams, and for the periodic assessment and continual
improvement of the strategy management practice. There is no single best solution. Metrics will be
based on the overall service strategy and priorities of an organization, as well as on the goals of
the value streams to which the practice contributes.

3 Value streams and processes

3.1 VALUE STREAM CONTRIBUTION
Like any other ITIL management practice, the strategy management practice contributes to
multiple value streams. It is important to remember that a value stream is never formed from a
single practice. The strategy management practice combines with other practices to provide high-
quality services to consumers. The main value chain activities to which the practice contributes is
plan, however, all other value chain activities are also impacted by the strategy management
practice.
The contribution of the strategy management practice to the service value chain is shown in Figure
3.1.
Figure 3.1 Heat map of the contribution of the strategy management practice to value chain
activities
3.2 PROCESSES
Each practice may include one or more processes and activities that may be necessary to fulfil the
purpose of that practice.
Definition: Process
A set of interrelated or interacting activities that transform inputs into outputs. A process takes
one or more defined inputs and turns them into outputs. Processes define the sequence of actions
and their dependencies.

Strategy management activities form two processes:

● strategy generation and continual development
● ad hoc strategic decision-making.
3.2.1 Strategy generation and continual development

This process is focused on defining, agreeing, and communicating of strategy and its continual
improvement. It is the key process of the practice; it is performed continually to support the
practice’s purpose and PSFs.
Table 3.1 Inputs, activities, and outputs of the strategy generation and continual development
process
Key inputs Activity Key outputs
Stakeholder needs and Strategic assessment Strategic assessment report

requirements
Strategy planning Strategic plans and models
Organization’s vision, principles,
and policies Strategy discussion and approval Strategy implementation
guidelines
Organization’s business strategy Strategy communication and
implementation Strategy communications
Organization’s portfolios
Strategy review
External factors, including risks
and opportunities
Strategy review reports
Figure 3.2 shows a workflow diagram of the process.
Figure 3.2 Workflow of the strategy generation and continual development process

Table 3.2 Activities of strategy generation and continual development process
Activity Example
Strategic Executive leaders of the organization together with key stakeholders assess:
assessment
● the direction communicated by the governing body
● requirements and needs of relevant stakeholders
● current position of the organization
● strategic review report available from previous iterations of the process.
The resulting assessment report includes analysis of the current position and performance
of the organization, relevance, and execution of the strategy and recommendations for
strategy improvement.
Where relevant, strategic analysts (consultants, advisors) are involved in the assessment.
Strategy planning Executive leaders of the organization together with key stakeholders define or update the
organization’s vision, principles, and objectives.
In consultations with key managers of the organization, they develop a portfolio of

strategic initiatives to support the objectives. The results of the planning are documented
and communicated to wider stakeholder group for discussion and approval.
Where relevant, strategic analysts (consultants, advisors) are involved in the planning
Strategy discussion The stakeholders discuss and approve the proposed strategy. Where agreement cannot be
and approval reached, decisions are made in line with the organization’s decision-making approach. If
decisions cannot be made, comments, and concerns are communicated back as input for
strategic reassessment.
Where relevant, strategic analysts (consultants, advisors) are involved in the discussion
Strategy The approved strategy is communicated to relevant stakeholders for consideration and
communication and implementation.
implementation
Implementation of the strategy is performed in conjunction with other practices as
described in Sections 2.3 and 2.4
Strategy review Assigned owners of the strategic initiatives and other key stakeholders review the progress
of the strategy execution. Resulting reports might include corrective actions recommended
to the implementing teams and/or serve as a trigger for strategic reassessment
3.2.2 Ad hoc strategic decision-making

This process is focused on providing strategic direction in extraordinary circumstances when
important decisions to be made are insufficiently supported by the current strategy and supporting
guidelines. This process is engaged when the situation has deviated beyond the tolerances
established by the current strategy, due to the insufficient resilience and adaptability of the
strategy or because of the internal or external crisis. This process includes the activities listed in
Table 3.3 and transforms the inputs into outputs.

Table 3.3 Inputs, activities, and outputs of the ad hoc strategic decision-making process
Key inputs Activity Key outputs
Organization’s principles, Detection of a strategic Assessment records

policies, and vision exception
Records of discussions and
Organization’s strategies and Situational orientation and decision-making
models assessment
Strategic decisions
Internal and external factors Discussing and agreeing decision
Review reports
New needs and requirements Decisions communication and
from stakeholders implementation
Risks Review
Figure 3.3 shows a workflow diagram of the process.
Figure 3.3 Workflow of the ad hoc strategic decision-making process

Table 3.4 provides examples of the process activities.
Table 3.4 Activities of the ad hoc strategic decision-making process
Activity Example
Detection of a strategic When an extraordinary event of strategic importance occurs is detected or

exception organization cannot operate within direction and constraints provided by
the strategy, the situation is escalated to the strategic decision makers.
These are usually the executive leaders of the organization.
Situational orientation Strategic decision makers assess the reported situation. If a strategic
and assessment exception is confirmed and the situation cannot be managed within the
current strategy, they proceed to discussing a course of action.
If the situation is within tolerance and can be effectively addressed by the

current strategy, this is communicated to relevant stakeholders for normal
execution, and the leadership team proceeds to review of the escalation.
Discussing and agreeing The decision makers discuss the situation with relevant stakeholders and
decision propose a course of action, considering the level of complexity, associated
risks, level of urgency, and other available information.
Where relevant, strategic analysts (consultants, advisors) are involved in

the discussion
Decisions The decisions made are communicated to relevant stakeholders for

communication execution. Control over the execution and, if necessary, correction of the
course may be performed directly by the decision makers or delegated.
Review Executive leaders of the organization together with relevant stakeholders

review the situation, including relevance of the escalation, the decision-
making process and effectiveness of the decisions.
Resulting review report serves as an input to the strategy generation and

continual development process.

4 Organizations and people

4.1 ROLES, COMPETENCIES, AND RESPONSIBILITIES
The practice guides do not describe the practice management roles such as practice owner,
practice lead, or practice coach. They focus instead on the specialist roles that are specific to
each practice. The structure and naming of each role may differ from organization to organization,
so any roles defined in ITIL should not be treated as mandatory or even recommended. Remember,
roles are not job titles. One person can take on multiple roles and one role can be assigned to
multiple people.
Roles are described in the context of processes and activities. Each role is characterized with a
competency profile based on the following model shown in Table 4.1.
Table 4.1 Competency codes and profiles
Competency Description
code
L Leader Decision-making, delegating, overseeing other activities, providing

incentives and motivation, and evaluating outcomes
А Administrator Assigning and prioritizing tasks, record-keeping, ongoing reporting,

and initiating basic improvement
C Coordinator/communicator Coordinating multiple parties, maintaining

communication between stakeholders, and running awareness campaigns
М Methods and techniques expert Designing and implementing work techniques,

documenting procedures, consulting on processes, work analysis, and continual
improvement
Т Technical expert Providing technical (subject matter) expertise and expertise-

based assignments

Examples of other roles which can be involved in the strategy management activities are listed in
Table 4.2, together with the associated competency profiles and specific skills.
Table 4.2 Examples of roles with responsibility for strategy management practice activities
Activity Responsible roles Competency profile Specific skills
Strategy generation and continual development
Strategic assessment Executive leaders TCM Good knowledge of the

organization, its
Key stakeholders environment, position,
and current performance
Strategic analysts
Good understanding of
the current strategy and
its performance
Good knowledge of the

relevant technology and
ways of working available
to the organization
Excellent analytical skills
Good communication
skills
Strategy planning Executive leaders MLTC Good knowledge of the

organization, its
Strategic analysts
its performance

relevant technology and
to the organization

outputs of strategic
assessment
Good analytical and

communication skills
Strategy discussion and Key stakeholders MCT Good analytical and

approval communication skills

organization, its
environment, position,

outputs of strategic
assessment and planning

Strategy communication Executive leaders LCM Good leadership and

and implementation communication skills

agreed strategy and its
impact on the
stakeholders
Strategy review Executive leaders TMC Good knowledge of the

organization, its
Strategic analysts
its performance
Good communication
skills
Ad hoc strategic decision-making
Detection of a strategic Any relevant stakeholder T Good knowledge of the

exception organization, its
its performance

relevant practices and
guidelines
Situational orientation Executive leaders TC Good knowledge of the

and assessment organization, its
its performance
Good analytical and

Situational analysis and

crisis management skills
Discussing and agreeing Executive leaders MLTC Good knowledge of the

decision situation and context
Key stakeholders
Strategic analysts relevant technology and
to the organization

Good analytical and

Situational analysis and

crisis management skills
Leadership and
Decisions communication Executive leaders LCM Good leadership and


agreed decisions and
their impact on the
stakeholders
Review Executive leaders TMC Good knowledge of the

situation and context
Key stakeholders
Strategic analysts the effect of decisions on
the organization and
other stakeholders
Good communication
skills
4.1.1 Strategic decision-makers

The role of the strategic decision-maker is usually pefformed by the executive leaders and the
governing body of the organization. Strategic decision-making as well as effective strategy
communication and leadership require the following key competencies:
● emotional, social, and systems intelligence
● cognitive flexibility
● self-leadership
● discerning thinking
● complexity thinking
● data-driven and insight-driven analysis and decision-making
● conversational intelligence, multimodal communication skills.
4.2 ORGANIZATIONAL STRUCTURES AND TEAMS

The strategy management practice is performed by the organization’s leaders supported by
multiple stakeholders across the organization. However, in larger organizations, a specialized team
of strategic analysts can be established to perform ongoing strategic analysis and advise decision
makers. The team sometimes consists of strategic advisors or consultants. Members might
specialize in specific subjects such as markets, products, brands, sustainability, innovations, and
so on. Strategy reports and plans might be drafted by the members of this team, but the
accountability for strategic decisions always remains with governing body and executive leaders of
the organization.

5 Information and technology

5.1 INFORMATION EXCHANGE
The effectiveness of the strategy management practice is based on the quality of the information
used. This includes, but is not limited to, information about:
• organization’s vision, values, and principles

• guidance from the governing body
• stakeholders’ needs and requirements
• relevant external factors (PESTLE)
• organization’s architectures
• culture and climate of the organization
• ongoing performance of the organization.
This information may take various forms. The key inputs and outputs of the practice are listed in
section 3.
5.2 AUTOMATION AND TOOLING

Strategy management is not usually perceived as a highly-automated practice. However, it can
significantly benefit from the opportunities offered by advanced analytics, big data, modelling and
forecasting. Collaboration and communication tools are also useful for every activity of the
practice. Table 5.1 lists the specific means of automation that are relevant to each activity of the
strategy management practice.
Table 5.1. Automation solutions for strategy management activities
Activity Means of automation Key functionality Impact on the

effectiveness of the
practice
Strategy generation and continual development
Strategic assessment Analytical tools Multi-factor analysis, Medium to High

forecasting, trend
Sense-making tools analysis, sentiments
analysis, sense-making
Communication and
collaboration systems
Strategy planning Analytical tools Planning, modelling, Medium

forecasting
Sense-making tools
Communication and
Strategy discussion and Collaboration and Group communications Low to Medium

approval communication tools and collaboration
Strategy communication Collaboration and Communication of High

and implementation communication tools decisions and feedback
Monitoring and reporting Monitoring of

tools performance, dashboards
and operational reports
Strategy review Analytical tools Multi-factor analysis, Medium to High

forecasting, trend

Communication and
Ad hoc strategic decision-making
Detection of a strategic Monitoring and reporting Monitoring of Medium to High

exception tools performance,
dashboards, and
Communication and operational reports
Communication of
exceptions
Situational orientation Analytical tools Multi-factor analysis, Medium to High

and assessment forecasting, trend
Communication and
Discussing and agreeing Analytical tools Planning, modelling, and Medium

decision forecasting
Sense-making tools
Group communications
Communication and and collaboration
Decisions communication Collaboration and Communication of Medium to High

communication tools decisions and feedback
Monitoring and reporting Monitoring of

tools performance, dashboards
and operational reports
Review Analytical tools Multi-factor analysis, Medium to High

forecasting, trend
Communication and

6 Partners and suppliers

Very few products and services are delivered using only an organization’s own resources. Most, if
not all, depend on other products and services, often provided by third parties outside the
organization (see section 2.4 of the ITIL® Foundation: ITIL 4 Edition publication for a model of a
service relationship). Relationships with suppliers and partners are therefore a key aspect of every
organization’s strategy. There are aspects of strategy directly related to suppliers and partners
(sourcing strategy), but other strategic principles, objectives and initiatives are likely to affect an
organization’s approach to relationships with suppliers and partners. For example, strategic
sustainability objectives are likely to change an organization’s approach to the selection and
management of suppliers, to ensure that external services and resources are sourced responsibly
and meet organization’s sustainability objectives.
Specific strategies, policies, and guidelines to support organization’s strategy in the suppliers and
partners dimension of service management are defined and executed in conjunction with supplier
management, relationship management, project management and other relevant practices.
External strategic analysts, such as consultants and advisors might be involved in the strategy
management processes in a capacity similar to the internal ones, as described in sections 3.2.1,
3.2.2 and 4.2. However, the main benefit of involving external analysts is to provide additional
insight for strategic assessment and planning. Strategic decision-making should remain a
responsibility of the organization’s governing body and executive leaders.

7 Important reminder
Most of the content of the practice guides should be taken as a suggestion of areas that an
organization might consider when establishing and nurturing their own practices. The practice
guides are catalogues of things that organizations might think about, not a list of answers. When
using the content of the ITIL practice guides, organizations should always follow the ITIL guiding
principles:
● focus on value
● start where you are
● progress iteratively with feedback
● collaborate and promote visibility
● think and work holistically
● keep it simple and practical
● optimize and automate.
More information on the guiding principles and their application can be found in section 4.3 of the
ITIL® Foundation: ITIL 4 Edition.

8 Acknowledgments
AXELOS Ltd is grateful to everyone who has contributed to the development of this guidance.
These practice guides incorporate an unprecedented level of enthusiasm and feedback from across
the ITIL community. In particular, AXELOS would like to thank the following people.
8.1 AUTHORS
Antonina Klentsova, Roman Jouravlev.
8.2 CONTRIBUTORS
David Cannon, Erin Casteel, Stuart Rance.
8.3 REVIEWERS
Akshay Anand, David Cannon, Erin Casteel, Erika Flora, Richard de Kock, Irina Matantseva, Anton
Lykov, Stuart Rance.


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Strategy management

ITIL® 4 Practice Guide

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1 About this document

1.1 ITIL® 4 QUALIFICATION SCHEME

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An important factor affecting an organizations’ strategic positioning and objectives is the

The strategy management practice ensures that:

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2.2 TERMS AND CONCEPTS

2.2.1 Business strategy/digital strategy/IT strategy 2

In a technology-enabled organization, the role of technology in the organization’s strategy is key.

Definition: Digital strategy

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Digitalization of the business strategy helps to achieve the following objectives:

Regardless of the terminology adopted by the organization, it is important to ensure that:

Figure 2.1 Business, digital, and IT strategy

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2.2.2 Purpose, vision and strategic objectives

The reason that an organization exists, or its core business.

2.2.3 Strategy in a VUCA environment

2.2.3.1 Organizational agility and resilience

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External influences could be political, economic, social, technological, legal, or environmental

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2.2.3.3 Adapting for variable complexity

Figure 2.2 The Cynefin framework 5

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Figure 2.3 The Triple bottom line model

To enable sustainability as a strategic priority, organizations should embed respective principles,

2.2.4 Business models and operating models 6

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Business models are frameworks that consist of three major themes:

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Activity Practice guide

Implementing strategic decisions All practices

Managing strategic risks Risk management

Measuring and reporting strategy Measurement and reporting

2.4 PRACTICE SUCCESS FACTORS

Definition: Practice success factor

The strategy management practice includes the following PSFs:

2.4.1 Ensuring that the organization's strategies are effective and

To create and execute an effective strategy, organizations 7 must:

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The key factors of successful execution of strategies are:

Table 2.2 Communication principles for strategic communications

Communication Strategic communications

Communication is a two- Strategic communications should not be limited to one-way awareness

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consideration to the information’s sensitivity and information security

2.5 KEY METRICS

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Practice success factors Key metrics

Ensuring that the organization's Stakeholder’s satisfaction

Number and percentage of strategic objectives achieved

Number and percentage of strategic initiatives successfully